GameStop’s new CEO, Ryan Cohen, wasted no time in making his intentions clear. Just hours after his appointment, Cohen sent out a memo to employees emphasizing the need for extreme frugality and efficiency in order to ensure the struggling video game retailer’s survival.
“Our job is to make sure GameStop is here for decades to come,” wrote Cohen in the email obtained by CNBC. “Extreme frugality is required. Every expense at the company must be scrutinized under a microscope and all waste eliminated. The company has no use for delegators and money wasters. I expect everyone to treat company money like their own and lead by example.”
Cohen, a billionaire activist investor and founder of Chewy, was previously the executive chair of GameStop. His firm RC Ventures is the company’s largest shareholder with a 12.09% stake. Cohen’s appointment as CEO comes almost four months after the firing of the previous CEO, Matthew Furlong.
Cohen became well-known during the “meme stock” frenzy for his investments in companies like Bed Bath & Beyond. He joined GameStop’s board in 2021 during the height of the phenomenon. Now, as CEO, he is responsible for leading the company’s efforts to reinvent itself.
GameStop, founded in the 1980s, built its business on selling video games, consoles, and other gaming merchandise. However, as customers increasingly buy video games online, the retailer has faced declining relevance and the need to explore new revenue streams. GameStop has experimented with launching an NFT marketplace and forming partnerships, like the one with now bankrupt cryptocurrency exchange FTX.
Despite the announcement of Cohen’s appointment, GameStop’s shares closed at $16.84 on Thursday, representing a nearly 9% decline this year. This closing price is less than a quarter of its all-time high close of over $86 per share in January 2021.
Earlier this month, GameStop reported a net loss of $2.8 million for the second quarter, compared to a $108.7 million loss in the same period last year.
Cohen’s memo emphasizes the importance of survival for GameStop. He highlights the need to avoid common mistakes made by retailers, such as buying bad inventory, using excessive leverage, and running high expenses. By focusing on the basics and implementing extreme frugality, Cohen believes that GameStop can remain in the game for the long term.
The road ahead won’t be easy, but Cohen is determined to turn the company around. As he states in his memo, “I’m not getting paid, so I’m either going down with the ship or turning the company around. I much prefer the latter.”
GameStop’s future now rests in the hands of its new CEO, who will need to navigate the challenges of a changing industry and chart a course for long-term success. Only time will tell if Cohen’s extreme frugality and emphasis on efficiency will be enough to revive the struggling retailer.